The European Commission has proposed a Council Decision establishing the EU's position within the EEA Joint Committee to incorporate the Carbon Border Adjustment Mechanism (CBAM) into the EEA Agreement. The proposal, published on 2 July 2026, aims to amend Annex XX (Environment) of the EEA Agreement to include CBAM regulations, ensuring equal rights and obligations for EEA EFTA States—Norway, Iceland, and Liechtenstein—in the internal market regarding carbon pricing at the border.
The proposed Council Decision is based on Article 192(1) TFEU (environment), Article 218(9) TFEU (international agreements), and Article 1(3) of Regulation (EC) No 2894/94 (EEA implementation). The EEA Joint Committee is to adopt a decision amending Annex XX to include Regulation (EU) 2023/956 establishing the CBAM and Regulation (EU) 2025/2083 simplifying and strengthening it. The EU position is set out in a draft Joint Committee Decision attached to the proposal, which includes adaptations beyond mere technical adjustments. EEA EFTA States must also contribute financially to the operation of CBAM systems across the entire EEA via a separate Joint Committee Decision.
The envisaged act will be binding under international law and published in the Official Journal of the European Union after adoption. Extending the CBAM to EEA EFTA States harmonizes carbon border measures across the broader European Economic Area, preventing carbon leakage and ensuring equal treatment of economic operators regarding carbon costs. This reduces competitive distortions but requires financial contributions from EEA EFTA States, potentially affecting their budgetary allocations. The move strengthens environmental cooperation between the EU and EEA EFTA States and may set a precedent for incorporating other EU climate legislation into the EEA framework.
Stakeholder impact - EU producers: Benefit from reduced competitive distortions as EEA EFTA States face similar carbon costs, leveling the playing field in the internal market. - EEA EFTA States (Norway, Iceland, Liechtenstein): Must implement CBAM and contribute financially to its operational systems, imposing new administrative and budgetary burdens. - Importers into the EEA: Face uniform carbon border adjustments across the entire EEA, simplifying compliance but potentially increasing costs. - EU regulatory bodies: Gain a harmonized framework for CBAM enforcement across the EEA, enhancing effectiveness but requiring coordination with EEA EFTA authorities.
Institutional follow-up The Council is expected to adopt the Decision, after which the EU will present its position at the EEA Joint Committee meeting. The Joint Committee will then formally amend Annex XX, and the decision will be published in the Official Journal.